A “rent-to-own” purchase provides an opportunity for many families to experience the “American Dream” OF home ownership without qualifying for FHA, VA, USDA or conventional financing prior to moving into a single family home in a safe and friendly neighborhood.
If you’ve experienced a bankruptcy, job loss, child support issues, tax liens or a foreclosure on your credit report this type of purchase may be a good option for you. While you’re living in the “rent-to-own” home you are working on restoring your credit to loan approval.
A written agreement is signed by the tenant and seller specifying the amount of down payment required, monthly payment, purchase price, an expiration date of the rental period. Any contingencies, inspections or repairs will be written into the agreement.
“Rent-to-own” homes usually require a deposit between $3,500-$5,000. The deposit secures the sale of the property to you and purchase price from the seller for a specific length of time. As you would do in renting a monthly payment is made each month until your financial issues are resolved and you’re approved for FHA, VA, USDA or conventional financing. The seller is usually generous with time giving the tenant 1-3 years to resolve financial issues.
The Seller is responsible for paying property taxes and insurance on the home during the rental period. Unlike a renter, the tenant is responsible for the maintenance and repairs on the home.